AT&T, Motorola gain wireless equipment deal

NEW YORK - AT&T Corp. and Motorola Inc. won a $1 billion contract to supply wireless equipment to a venture formed by three regional Bell companies and AirTouch Communications Inc.

Under the agreement, AT&T Network Systems, a unit of AT&T, and Motorola will supply equipment to PCS PrimeCo, an alliance of Nynex Corp., Bell Atlantic Corp., U.S. West Inc. and AirTouch. With the equipment, PCS PrimeCo will provide the next generation of wireless voice and data services, known as personal communications services, or PCS.

The contract, expected to be one of the largest awarded, gives the edge in supplying PCS equipment to AT&T and Motorola. Other PCS equipment makers include Sweden's Ericsson AB and Northern Telecom Ltd. of Mississauga, Ontario.

The equipment will be based on CDMA, or code-division, multiple-access technology. With it, PCS companies expect their networks to handle 10 times as many calls compared with existing cellular networks.

"This is the first big CDMA contract," said Robert Wilkes, analyst at Brown Brothers Harriman. "They are the two leaders."

Mr. Wilkes said Northern Telecom may have to "redouble its efforts" in the PCS market to compete against AT&T and Motorola.

The contract calls for AT&T and Motorola to supply switches and base stations, said Paula Angel-Jones, a spokeswoman at PCS PrimeCo. The 18-month contract will be split almost 50-50 between AT&T and Motorola, she said.

DSC Communications Corp. will get a portion of the contract from AT&T and Motorola, analyst Mr. Wilkes said. DSC, based in Plano, Texas, makes switches that route phone calls over a network.

DSC officials weren't immediately available for comment.

Marc Cabi, telecommunications equipment analyst at Salomon Brothers, said Motorola is expected to win more contracts from PCS PrimeCo when the alliance enters the next phase of network deployment.

In late trading, shares of AT&T were down 37.5 cents, at $56.25; shares of Motorola were down 12.5 cents, at $74.50; shares of DSC were up $1.125, at $53.625; and shares of Northern Telecom were down 50 cents at $36.25.